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Saturday, July 31, 2010

WEEKEND REPORT

I'm going to make the weekend report available to everyone this week along with a discounted yearly subscription offer. I've decided to just unlock the weekend report on the premium site. (I'm getting too many requests to keep up with them all).

The link to Paypal for the discounted yearly subscription is in the report.

A few people have had trouble with the charts loading in the email and this will take care of that problem too.

The fact remains that from 2003 on, you would have been better off owning gold than gold equities (as represented by the HUI), and better off owning silver than silver equities. You neglect to mention that the brief period of outperformance you point to in 2009 was largely a counter-reaction to the apocalypse gold stocks suffered in 2008.

The best and only argument for owning gold equities at this point is the XAU:gold ratio. It currently stands around 7, which in the past suggested massive undervaluation, but the truth is this ratio has been very elevated since 2006.

Nonetheless, all gold stocks have to do is sustain that ratio of 7 and they will at least match gold bullion for the rest of the bull market. To sell gold equities in exchange for gold right now is to believe that that ratio will return to 10 or 11, which is where they were during the worst of 2008. Unfortunately, that is exactly what they have been doing this year.

The truth is that none of us know the answer. Not you, not Tim Wood, nobody. My personal hope, as someone who owns several million dollars in gold stocks, is that we experience some reversion to the mean. But it is possible that money will continue to flow into the ETFs, and gold stocks will be left behind.

The underperformance of the last seven years should not simply be ignored or wished away. Three of your recommended silver stocks -- CDE, HL, and SSRI, are perennial underperformers and diluters. An investor in CDE has managed to lose money even as silver has quadrupled. CDE has gone nowhere during a ten-year bull market. I wonder how you can possibly justify owning it, let alone recommending it to subscribers. CDE is literally a scam designed to transfer money from investors to the company's management.

It may make sense to hedge one's bets by putting a percentage of one's assets in GLD, SLV, etc. That's the only way to be sure you won't be left behind.

Actually you still would have been better owning miners. From the beginning of 03 gold rose 216%, Miners 233%.The point of owning gold stocks isn't to try to outperform on a daily basis. The point is to be in when gold surges into a C-wave top. It drags everything with it and that includes miners.

During one of these speculation will run hot and heavy and the HUI has been know to stretch 50-60% above the mean. During times like that stocks like CDE that has underperformed for a long time can recover all those losses in a matter of weeks.

Since I can't see the future I just want to make sure I'm in before it starts. If I have to wait for months so be it.

Don't forget I haven't been in these silvers until just last year so they aren't down all that much from where I bought and I'm fairly confident a final C-wave thrust will send all of them to big profits.

The gold:xau ratio is currently 6.97. Normally it should be between four and five, with four being a definite sell zone. During 2008 it reached 11, but in 2009 it went down to 6. During 2009 it has crept back up to around 7.

If the gold:xau ratio declines over the next six months, I will hold my positions.

But if the gold:xau ratio continues to rise, even during Gary's "c-wave" rally, then I will gradually sell them and purchase CEF (Central Fund of Canada), which holds bullion in a closed-end fund, as well as SLV.

I will use 7.25 as my "line in the sand". If the Gold:Xau ratio crosses that line -- particularly during a rally, when Gary says it should be declining -- then I am not sticking around. I figure I can make a lot of money in the silver etf, so I don't have to miss out on the bull market by being greedy.

I am playing silver right now instead of miners. I believe that although miners have the potential for doing better than silver, silver is a better risk adjusted reward. SLW, I also like for its business model. This is an exception to the rule. But I know I would hate to miss the gold bull due to being in the wrong place.

That being said every argument exists for miners to beat my position, but I would rather hold silver(which can't go bankrupt and is not subject to oil costs).

I do admit this is one of the few times diversification (in pm’s that is) actually makes sense.

I own platinum, palladium, a lot of physical gold, and I am currently building on silver positions and my favourite best in breed miners. Miners I do admit are my smallest positions. But one must decide on an allocation that will allow them to accumulate during drawdowns, and not sell. If I had too much in miners, I would be freaking out as much as troll boy. :)

O.K. guys, let's see what happens. I have been trading for 35 years and have just started posting my real-time trades to see if anyone is interested (if not, that's fine---I just won't bother). I have posted the following so far: Long GDX at 47.15 from last week; and as of Friday long UUP (the $) at 23.73; long EUO (short euro) at 21.80; and heavily long SPY and QQQQ at the close Friday. Some of these are correlated, so I may lose on UUP and EUO on Monday, but if so will win much bigger on SPY and QQQQ. My proprietary system got a buy signal on Friday (it has an 80% accuracy rate when tested back to 1980 and is good for an immediate 1% move). It typically gives about one signal a month, but is a bit random as to frequency. Let's see what happens!

I think this market is going to chop for a while longer, if we do get a real breakout (either direction) I'll be buying but otherwise I'll be mostly out and enjoying the rest of my summer. The long term momentum gauges on the gold stocks especially need to be recycled IMO to a lower level before a meaningful breakout in them can occur, judging by what has happened in the past. In general that means more chop and failed breakouts to shake out more weak hands.

Yes, that's right. That's why I pointed out that I am longer stocks than I am long the dollar. I believe UUP will hold at 23.60 or so, so my risk is small. I expect a sharp one day rally in stocks (at which time the $ will go against me) and then a drop in stocks and a $ rally. As long as you track how your various positions are correlated you'll be fine. I am also short some euro which will also likely go against me for a day or two. As well, with tight stops the losses are small. I take profits on about 30% of my trades but make money pretty consistently in up or down markets. As Gary has said, position size and risk management are the keys to trading. I expect to have a positive day tomorrow even if I lose on a position or two. I am now moderately long GLD, SLV, and GDX as well as SPY and QQQQ. By the way, a great site to track real-time future in just about everything is http://finviz.com/futures.ashx

Justin: I am happy to take short-term trades without breakouts and within ranges. I was short the day before the 261 point drop and covered the next day. I love choppy markets that get overdone in both directions. It seems to me that the market has been compressing moves the past two years (is that HFT at work?) Zoom down---zoom up---then zoom down again. As long as they hit tradable extremes I am happy. And I enjoy the summer by trading! If I felt this was "work" I wouldn't do it. The only unfortunate time is when there is nothing actionable! If we pop 100 points or so I believe I will get a chance to short as some oscillators are nearly dramatically overbought already. I will post if we get there.

"Yes, that's right. That's why I pointed out that I am longer stocks than I am long the dollar."

" I am now moderately long GLD, SLV,"

Terms like "moderately" and "longer" are what makes or breaks a traders results. How is your size determined, and what % of your portfolio is each of the trades you mention? It is more important than the direction of your calls wen determining profitability.

GaryPretty miserable performance for Gold recently considering the dollar has declined 10% already-I thought you said a weaker dollar would accelerate the gold price?I think maybe the deflation effect is at work and Prechters call for a severe Gold decline may yet have its day.

Size is determined by feel. I do not have a set of rules for such thing. As II said before I have five accounts so percentages are hard to say, but in the main trading account I am 30% long gold and silver, 8% short euro, 12% long dollars, and there's a little of this and that as well. But remember, the $ and euro are much less volatile than SPY and QQQ, so the percentages don't help you much when calculating the portfolio risk/reward. You need to crank in the volatility as well. By the way, the system looks pretty good on calling for an immediate 1% rally as the future are already up .6%. If you can;t make money "knowing" you're going to get an immediate rally, you really shouldn't be trading. To hell with the percentages. I never look at the account that way. But since you seemed to want to know...

Pretty good. Not many systems call for an immediate 1% move and get it the very next day. Hard to not make money when you know that's going to happen. Just buy a bunch of SPY, QQQ, IJR, or what have you.

Sold all the SPY (1/2 the etf longs; holding Q's for now) at the opening. This ought to be a one-day wonder so I may be short by day's end. $ is near my atop point, but I will give it a little more room as the coming decline ought to give it a pop.

I'm not troll (I'm long the PMs) ... just making what seemed like a pertinent observation. Dollar gets crushed, equities flying, and GDX limps down to a gap fill. Underwhelming thus far, but the day is young.

I don't think we'll hear much from troll until his added gold shorts can look good in retrospect. After gassing on to everybody here about the folly of sitting patiently through draw-downs, he's apparently faced with a similar decision.

FWIW, I see a bottom in the 79.60 - 80.85 (DX) range. This is the range of the 4th wave of the 3rd wave of the rally from the November low to the June high. If I had to pick an exact price, I'd go with 79.82 which is the 62 percent retrace of the November - June rally. DX is close to that price range now, but still has a bit more to drop.

anon says, "The action in the PMs ex-gold (as well as oil and base metals) would suggest the rally is on the industrial trade, not the monetary trade. Compare GDX with OIH, BHP, VALE, FCX, RTP, etc."

Could be, so what do you do with that observation? Flip-flop to industrial metals? How do you know how long this observation holds? Does it mean tomorrow will do the same? Shouldn't we be long the S&P today, instead of any of the metals?

It's not a trade recommendation, but if the presumption is the only way for equities to rally is on the back of a debased dollar, as opposed to a pick-up in productivity and worldwide demand, days like this call that presumption into question, imo.

I don't use waves and such, I use oscillator extremes. The $ is now severely oversold. I also only do this with major ETF's (European country funds, currencies, SPY, etc) as there''s a limit to how far they can go without regressing to the mean. I have chosen to hold my UUP as I am long more index ETF's than I am long UUP and they are correlated. I am disappointed that UUP is down so much and that FXE is up so much, but I am significantly net positive on the day so, well, there you have it. I will be very surprised if the $ doesnt have a sharp rally from near here, but I can;t be sure how much further down it will go (not much, though) By the way, sold my GDX at 48.40 when it started reversing. I will buy it higher once gold confirms the bottom is in like Gary said. Nice trade from 47.15 (as previously posted here).

Thanks DG. I think you will turn out to be right on the dollar. I looked at the chart in more detail and I believe we are close to a low here. However, I don't know how significant a bottom this will be, whether it lasts only days or whether it turns out to last weeks or months.

Yes, I rarely know how far they can go (unless it lines up with my macro view---I believe FXE will get killed over the next year, for example). Once the ETF rallies a fair bit (1% or so?) I put in a mental stop at break-even as it is a very good trading rule not to allow gains to turn into losses. In this case with the $ being against me the oversold will work off into that pop and I may just get out even and move onto the next trade. In general I let the market and risk management tell me what to do.

GDX still leading GLD, and down, unfortunately. We pattern-obsessed technicians (and PM bulls) would rather not see GDX close below 47.45 and print a pretty stark engulfing red candle.

Patience is one thing, but it is vexing to see the stars theoretically align for the miners and then have them so heavily underperform gold, SPX (and more specifically, the materials complex, which is having a banner day).

I continue to believe the low for gold was NOT last week and that we have a bit more decline left. Lows generally do not occur slowly over a small range like we saw. My target is still approx 1145 (1120 if that doesn't hold, which i think it will.) At that point I will be fully long again and joining Gary and others for fall rally.

The low i'm expecting will also punch through 1150 and provide some necessary volume selling. (Such a drop would also break through a multi-hit uptrend line starting jul09. Thus more selling again.) We are too close and that zone is too juicy for it not to punch through, imo.

New short: OIH at 110.11. Again, we are way overdone to the upside. These major ETF's have a tremendous tendency to revert to the mean in the short-term. Note how the FXI short has stopped moving up as the Dow went from plus 130 to plus 200. It's like Gary says about not getting too far away from the 200-day line. These things are like rubber bands and it takes more and more energy to stretch them even another few inches. OIH is about as far as it can go.

I see a lot of you talking about trading SLV or AGQ or some other PM ETF. Unless you are trying to trade very small lot sizes, you would be much better off with a futures account. First, you can use leverage without paying margin interest. Second, the tax treatment of futures is much, much better than that of SLV or GLD. Third, you have 23 1/2-hour liquidity. This last feature is useful when your after-hours analysis suggests a position change is necessary.

Small head start in the OIH short. O.K. I posted these trades in part because I have seen "traders" get bashed and told how they can’t make money. Well, I posted shorting before the 261 point plunge, buying and trading GDX, going long this past Friday for an immediate sharp rally (I think today qualifies!). I am having a good year. I have a few trades still in process and we can see how they work out. The other reason for writing is to see if there were any other experienced traders out there that I could exchange ideas with, but I guess it's not that kind of a blog. I may post from time to time anyway. I will post if GDX gives another low-risk entry point. Good luck everybody!

So impatient :) You don't buy PM or minerds for what they do today. You buy for what they do at the top of the C-wave. That won't come till fall at the earliest and probably spring. If you aren't prepared to hold till then don't buy.

I understand the program, Gary, and it's not impatience so much as bafflement. To have such a spectacular day for stocks (basic materials in particular) and a thudding one for the dollar on the other end of an apparent washout for the PMs will tend to make this home-gamer question the thesis. Most days are just noise, I agree, but this sure seems like a dog that didn't bark.

So Gary, I suppose these are one of those days you spoke about when the temptation is to jump to something else that is hot. In this case it happens to be the rest of the market! :-) OK, back to Old Turkey riding a Bull (visual included!).

Two reasons: It was exactly OIH that gave me the sell indication, and I don't like these double-inverse mocha latte triple leveraged fancy things. They do not track well, some lose value whenever they need to roll over the futures they use for the leverage, and I do not need the buying power. I just do twice as much of the underlying instead of the leveraged one if I want more exposure. I always have cash in my account in case something delicious shows up. I had no cash by April of 2009, for a while, but that is very rare. Good start in OIH though. I am on the flat side now, with some longs and some shorts. I am already interested in seeing what tomorrow brings. This is a fantastic sport!

For all the concerned about miners vs. metals, it might be best to be 50/50, because you'll never get it perfect and therefor always chasing yesterday's or last weeks performance.50/50 takes that concern away.

Personally, I'm not a miner guy as I really cant' stand a possible criminal management enriching themselves at shareholder expense. For me, it's too much work and far too unpredictable to guess who will/won't screw shareholders (even Buffett is a rat if you ask me), so I just stick with metal etfs.

That isn't what I recommend for others, just what I'm comfortable with. Figure out what is important to you, and make the decision. No doubt, some miners will far outperform gold and I know that, but we must do what works for us individually.

That's true but didn't some of the big gains in the miners (and gold) actually come during the downturns in the market (i think 2002-2003 but I could be mistaken). My real concern is whet her the equity market doing well is actually holding back gold and the miners because there is action elsewhere. Maybe we need a bit of a bear for the miners to take center stage?

The dollar is stating the move down into the 3 year cycle low. There is no way this doesn't send gold to the moon. Just have the patience to hold on for the ride and ignore what's happening in the stock market.I'm going to talk about this in tonight's report BTW.

It sounds like people want to predict the possible bear mkt in stocks, in order to play gold long?

Well, if one can know that stocks will go lower or higher when deciding to trade gold or any other vehicle, then why not trade stocks. It appears as though anon thinks stocks might go higher so he should wait on gold. I don't know, but if he thinks that's the case, then he should buy stocks.

I find it ironic how the market has seemed to blow off the Euro crisis in a similar manner to how the housing crisis was dismissed in 2007. Once problems with the Euro flare up again, which they will, new dollar lows are going to be very hard to come by. I'm sure most dollar permabears will disagree with me but the fact remains the Euro is still in a well defined downtrend.

Justin,I wouldn't make the mistake of trying to predict the euro or dollar based on a chart. The fact remains Bernanke printed trillions of them. The market is going to make him pay for that. (really it's you and I that will pay).

If Bernanke's actions were of that much significance, why has the dollar failed to make a new low for 2 years? The speed of this decline is going to turn out to be good for the dollar if it resumes its uptrend in that it has probably shaken out a lot of weak hands. The reverse is true for the Euro most of the shorts have now been forced out due to covering their positions and now the Euro is free to resume it's fall with no short covering to offset the decline.

The fact is if Bernanke's actions were the most important driver of the dollar, then new lows would have already been achieved. Vice versa with the Euro, how does the Euro make a multi-year high in early 2008, well before the collapse got really going, and not get even close to making another new high if Bernanke's actions were really that close to destroying the dollar?

Gary the dollar is 60% inverse the Euro. So are you suggesting that the Europeans in a manner of 3 months have fixed a crisis that was getting close to tearing their currency and union apart? That sounds a little like smoke and mirrors to me. You just can't argue with the fact that the market is clearly less concerned about the dollar than it is the Euro, which explains why we have lower lows in the Euro and higher highs in the dollar. You're probably going to have to readjust your cycle work once this continues to play out in the way I think it might.

Justin simply happens to have a different view of the markets that he's willing to explain and debate. He shouldn't be discouraged from sharing it just because he happens to disagree with Gary, and I believe Gary feels the same way.

As I've said before I could care less what anyone else says about the markets. I'm only interested in understanding what the charts are trying to tell me and what the real trends. Bernanke has supposedly printed the dollar into oblivion according to Gary yet it is worth more than it was 2 years ago. That doesn't make much sense to me, which is why I use the charts.

G said"I'll just say it again, all the charts in the world are not going to stop the cycle from completing and Bernanke has just guaranteed that the move is going to be extremely intense."

I still don't get it. I mean I try, but in order for the dollar average to go down the Euro must go up. Or the USD has to be the bigger piece of garbage. Either way it is relative. I for one, don't understand the point of looking at the average when in itself it is nothing but an inverse composition of several currencies, where the Euro is the biggest component.

Now if the arguement is that the US will destroy its currency quicker than the rest of the world, that I get. But I am confused by the mantra that most countries are destroying their currency, but somehow on a relative basis the USD should fall further. Unless again the arguement is the that US is the worst of the bunch.

Livermore used to lock himself in a room and ignore what everyone else says, and just try and understand the tape. That's basically my philosophy. I read a lot of stuff online, but ultimately I form my own opinions.

Gary you actually believe in Europe's austerity measures? So are those Greeks that were set to retire at 45 or whatever it was now going to work until a normal retirement age? Jim Rogers, who you've quoted as being a role model, says Europe's austerity plan was nothing but a PR stunt. I tend to agree with Jim you don't solve a problem that immense with 3 months of smoke and mirrors.

I'm mostly out of the market currently, I am short and long the dollar but that trade is still small in size since I'm waiting for the profits before I start growing it. I don't add to trades that aren't profitable, that's how you end up losing more than you should.

As far as believing what I say that's up to you. Of course I could be wrong. Would Gary or anybody else on this blog consider the fact that they could be wrong? Maybe it's my curiousity that keeps me posting on this board, I wonder why people get so dogmatic on beliefs about things when the charts suggest otherwise.

Justin says;"...Bernanke has supposedly printed the dollar into oblivion according to Gary yet it is worth more than it was 2 years ago. That doesn't make much sense to me, which is why I use the charts."

well I would say the dollar buys LESS gold today than it did two years ago. And two years ago the DX was at 70-72? It buys a lot less of many other things as well.Anyway, we will know by spring if Gary's cycle theory or Justin charts tell which was closer to fact.

"Now I want to reveal my latest thoughts, which have finally come together. The US has a national debt of $13 trillion (that's trillion, not billion). There's no way in God's name that the US can ever pay off that debt. Actually, if the US does nothing the interest on the debt will eat up the nation. Worse, aside from the national debt the US has over $50 trillion in unfunded liabilities.

To put it frankly, the US is facing a debt future that can not be solved by cutting back on expenses and raising taxes. Even if the US taxed away all the income and profits of individuals and all corporate profits, the government would still not be able pay off its debts.

In my opinion, the US MUST default on its debt. There are two ways to default. One is simply to renege on the debt. I don't think the US would ever do that. If the US did that, nobody would ever deal with the US again. The other way to default on the debt is to inflate it away. I'm absolutely convinced that this is the path that the US will take. If the US inflates enough, then over time (many years) the devalued dollar will tend of reduce the power of the debts…"

Okay I am bored. That must mean something for gold. The recent correction was boring, the on going arguements are getting boring. First time in my life I have been bored into my position, instead of out of them.

I think Ben needs to come out of the closet or something. Maybe admit he is part of the Stonecutters.

I think it is a bit of a slight of hand looking at currency pairs right now. There are valid points to all the arguments below but consider this analogy as to what is happening right now.

The US dollar and the Euro are on a seesaw. Right now Ben is eating alot of food (more QE) and the Europeans are on a diet (austerity measures) albeit one like most diets will not last. So the dollar is going down more than the Euro. This is the currency pair analysis.

NOW, imagine this seesaw is thrown out of an airplane at 10,000 feet with a 1 ton brick rock attached to the bottom of it. This is the fiat vs. gold analysis.

They are both dropping versus gold but I think Gary is saying gold will go up versus the dollar a heck of a lot more than the Euro in the medium-term because of the gorging/dieting situation right now but long-term they will both be gaining weight.

In my opinion gold is entering a corrective phase I just don't want to be a part of (for a larger percentage of my cash), so I'm out and just going to watch and collect a few bargains if we get them. I could be wrong but if I am I know where that is.

The dollar I believe is still in an uptrend and the Euro in a downtrend, and the market in general is potentially forming another major top. There's a chance the market could break out again, but we'll have to wait and see. For the most part the market is just grinding still, most stocks are still recovering the down move from May and June.

All I hear everywhere is deflation yet the entire commodity complex is saying the exact opposite.Grains are going nuts, CRB is threatening to break out above the 280 resistance and oil is over $80 and closing quickly on new yearly highs.

If commodities (and particularly oil) will exhibit inflationary characteristics (i.e., the go UP) then could this possibly be the same situation as the C wave in 2007? If it is miners above all else (gold or silver I suppose makes a difference) then wouldn't it be necessary for the "real" price of gold (gold divided by the commodity inputs) to be increasing which MAY not happen in this situation or will it (or does this analysis even hold water)?

LOL I warned them time after time that the G-man always ends up being right, but they never listen. They didn't listen in February and they didn't listen this time and I'm pretty sure they won't losten during the next correction.

"I currently have 207 short positions. I went through all my charts today, and I also did some new searches for other opportunities. Having done that, I found a couple dozen more stocks that I like on the short side.

TK doesn't publish his performance other than in very general statements or picking out a specific position (which has obviously gone his way). Without knowing the exact performance, it's only speculation as to how he is really doing.

It's pretty obvious TK is trying to fight an uptrend. He did the same thing in March and April and he did the same thing in Nov. - Jan. Come to think of it he did the same thing during most of the last bull market.

I think it's safe to say Timmey is incapable of trading in a bull market.

I'm afraid many people here don't know what a technician is. I am one, and I just posted four successful trades in a row. Bad technicians get smushed just like bad fundamentalists. By the way, technical does not equal chartist. Charts are an aspect of technical analysis that is sometimes useful. Just like earnings is just a part of fundamental analysis. I am having a great year. Are you? Spend your time learning from Gary rather than criticizing things you do not even begin to understand. Gary uses cycles---that's technical analysis. Even pure charts work if you know how to use them. Anything can be done badly, of course, and those people will lose just like the bad fundamentalists do.

I know what technical analysis is, and more importantly, I know when a trader can't define his position size exactly, he ain't no trader.

You were asked several times, and have no clear answer. If you don;t know, you don't trade. Not for long anyway. Calling direction on individual trades has a 50% chance of being right. What's so genius about that?

I don't give a rat's ass if you guess 5 in a row...how much did you make, how much did you risk, and were you consistent in your approach. Quit tooting your horn, nobody who knows anything is impressed.

Geez, Anon, did you get up on the wrong side of the bed this morning and slam your body into a wall? You seem to be in a lot of pain, lashing out like that. I ought to feel sorry for you, but instead I'm annoyed that you've caught a case of the nasties and you seem to enjoy throwing it around, trying to make others feel as uncomfortable as you do.

I read that isn't legal for fund managers to give out stock picks on blogs. So I don't think TK runs a hedge fund, other than in his head. There are lots of interesting characters in financial blogosphere. I was reading Atilla's blog (remember that one?) awhile back and he was calling everyone who sells subscriptions and books 'charlatans' and 'snake oil salesmen'. Now he himself sells a subscription and is writing a book. I guess that makes him the biggest charlatan of them all. Weirdo.

Instead of being happy he discovered Gary, and taking his own dispensed advice to others that they should learn from Gary, DG instead comes here with his awesome 2 day record and begins the lecture on how we'd be having a great year like him if we knew anything.

Funny you see DG's posts as "lecturing". I see them as sharing information. It takes time for him to make write the posts and there is no reward in it. I give him the benefit of the doubt that his motivation might actually be to help other traders. Instead, you see him as someone who is bragging. But isn't that what you are doing when you spout how much your account is up this year?

Fine with me if you want to call my posts "lecturing". I would rather participate in lecturing than indulge in ridicule and sarcasm.

Sorry if I accused you of saying how much your account was up. I thought you were the anon who said their account was up more than what DG said his account was up. (It's hard to keep all these "anon's" straight.)

I don't really remember where I saw the data (I think it was one of Mark Douglas's books but I could be wrong) but a study was done on trading and risk management. The outcome was that anyone who is risking more than about 3% of their account on any one trade will eventually go bust.

So if a trader comes on and claims to be long term profitable we can pretty much assume he either knows how to control risk or he's just lucky ... so far.

Now one can control risk in two ways. They can take a trade with a small enough position so that it can work. Ie. with a 10% stop. This strategy tends to produce more winners.

Or they can take larger positions but use tight stops. This strategy is conducive to taking a lot of small losses. Since DG has clearly said he looses about 70% of the time it seems pretty obvious he has chosen the second method of trading.

Ironically this strategy will produce better returns if one can let their winners run because they will have larger position size.

However most humans are not emotionally equiped to trade this way. When someone takes loss after loss trying to get into a position they get gun shy and then they tend to take profits very quickly when they have them. That of course defeats the entire strategy as you need to let your winners win big in order to compensate for all those small losses.

Trading is not an easy business folks. It may seem easy because the only physical activity you have to do is click a mouse but the reality is it's probably one of the toughest ways to make money in the world. Not to mention you are competing against the smartest and best capitalized people in the world.

I believe "anon" was referring to how over the past few months TNX (treasury yield) and SPX have moved in the same direction. The past 3 days TNX has moved down, but SPX has gone up. Maybe just "noise" and the correlation will get back in sync again, or do we have a divergence from the correlation that's been there over the past few months?

in case you were wondering how GARYUK was doing .. here is his post from another site.

Gary_UK 1 hour ago

Hey Gary.

I have the SPY wedge apex at 1150ish, so nearly there. I saw Gld/Slv has busted under 6.4, and I thought 'uh-oh'....then I noticed the last 2 times it had tempted fate...Mid January, and end of April 2010, and both times it signalled a major top.So, I'm hoping it will do the same again, otherwise my shorts will get shot to pieces!Interesting times, when you hear on the news China is slowing to a crawl, and Bloomberg TV spin as good news, because the expectation was for worse, and it means China will not tighten any more.The world has gone mad, but reality bites!

Wow, the posters on this site are amusing! If you don't share your track record they say you are hiding your losers. If you share it you are bragging! If you assert something without proof you're a liar. If you state the facts you are lecturing. Adorable. O.K., have no fear. I'm done posting. PrimaCanyon was right: after 35 years of trading I thought some people might like to see one way it's done since Gary doesn't focus on it. but if it makes you emotionally upset I am happy not to waste my time. It's funny how some people will read a book on trading tips, but if someone says it face-to-face it's bragging or lying. As for it being "tacky" to say how you have been performing, it ought to be the first question you ask! Who wants to hear from someone who is down 23% for the year?! Gary is right---trading is not for most people, and clearly not for this crowd. I tried and have learned not to waste my time. And I agree with the other poster about the immaturity of the regular writers. "Laugh My Ass Off?" Please. It's 4th grade all over again. Good luck everybody and so long. (and now may the insults and final immature outbusrts begin!)

Gary, thanks for your comment. It's not about the thick skin, it's about wasting time and thoughtful energy. I asked once if it was a service to anyone and got only two lukewarm responses. There will always be crybabies and insulters, but if I felt I could help I would, morons be damned.(I have been a professional attitude and success coach for 15 years and like trying to help others) But if there is no or little interest, what's the point? You have a great blog (I mean that) and help keep people's eye on the ball. "It's a bull market" is the perfect thing to tell people when they are ready to puke out their positions during a correction. But your blog does not attract mature traders, so my comments are probably not worth much here. Thanks for your thoughts though. I may post time to tim to hear what you have to say.

DG, we really don't know whether Gary attracts mature traders or not. My guess is that if there are mature trader's out there, most (all?) would not get caught up in the childish taunting that seems to make up much of the comment section.

DG--I am interested and attempt to read all the posts because not only might I miss something but I might miss learning something! If I assume it a childish and petty post I mentally disregard and move on. I for one hope you keep posting DG even if I disagree (as we all will disagree with each other sooner or later).Thank you.

Gary, I hesitate to post exits and stops because I have many correlated positions. I may give my dollar long more room because I am also long gold and they tend to offset each other, for example. Same with exits. Also entries are not really meaningless if you place a stop at break-even once you have a modest gain. I shorted AMZN yesterday, got 1 point in the black, and then covered at break-even this morning. Give me a good entry that works right away and I'll take it from there! That's the hard part with tight stops, but that's what I have spent my whole trading life working on, like the system I described that got a buy Friday and had us up 200 the next trading day. If you're bullish you have a head start and sell your SPY's at break-even. If you are right you may hold for months. the head start allows the tight stop and possible large profit (to more than offset all the small losers)As an aside, I covered my FXI short and OIH short this morning because the extremes have worn off and I am now fairly flat. When I see no extremes I tend to play small, unless I am adding to a profitable position.

One of the hardest things for novice traders is to learn when to exit. You obviously do it by your gut feel(35 years experience).

Since a newbie is not going to be able to do that you will need to post some kind of stop and target or post your exit in real time or anybody trying to follow your lead will just end up loosing money because they woon't know when to get out.

I suspect very few traders were expecting the OIH trade to be a day trade. Just as an example. If they held into tomorrow it may end up being a loosing trade as it is a counter trend trade and fairly dangerous.

I always suggest that novice traders develop a mechanical system for entering and exiting. And to back test the system rigorously before applying.

And if they find they don't have the discipline to follow the system then forget about trading until you do have the emotional control required.

Am I the only one that thinks DG is whiny, and quite possibly not a verifiable, profitable trader?

Gimme a break! After 2 days and 4 winners (which STILL doesn't imply profitability) he wants readers to cry out for him, or "he's taking his system elsewhere b/c he's wasting his time" on us ignoramuses.

Lifestyle coach, my ass. You can't even take criticism. How many careers do you have anyway? Really read through his posts, with his many presumptions of others (that we are ignorant of TA, not as profitable as him), as well as his bragging of unverifiable BS (yep, I said bragging, which it was).

To be honest, I'm disappointed in the DG ass-kissers looking for some holy grail, and hoping a stranger might provide it. This business is FULL of self-deceptions and even liars, until DG tells you exact size of each trade, you cannot know if he is or not a real trader. Amazing how people gloss over the single most important fact...size of winners vs size of losers.

I'll tone down, but remember, I'm not the one holding myself out as close to expert. DG is, so he can be held accountable. Calling direction of a vehicle is not nearly important as size and risk control. Any real expert will tell you that. So DG, cant' you tell us the position size on each trade, it's not like your broker doesn't tell you. They give your price AND size.

I don't owe you a thing. It's worth not sharing position size just to watch you have a meltdown! Saying the market will be up a ton tomorrow isn't even interesting to you?! Calling for an immediate drop in OIH isn't interesting to you? Let's see you do it. Let me know the next time the market will move 100 points in a day. As Gary has requested me to keep posting I may, and will, as someone else suggested, ignore the crybabies. If you don't like the post or can't figure out how to take advantage of a market that is going to move 100 points, that's your problem. And, yes, I'm a successful experienced trader who has worked very hard for many years at my craft...and you can't handle it for some reason. There are probably other things that you do better than me. So? What's the big deal. You must agree that there are decent traders in the world. is it so impossible that one of them writes to Gary's blog? I am not a great trader, but I am a consistently profitable one. Deal with it!

"Am I the only one that thinks DG is whiny, and quite possibly not a verifiable, profitable trader?

Gimme a break! ..."

Geez, another person who comes on here, full of meanness and venom, and attacks someone else. And does so anonymously!

Why are you so angry and what do you get out of being mean, attempting to shame or ridicule or hurt someone else? It's sadistic.

As far as other traders looking for the holy grail and kissing this guy's ass goes, that's just another mean comment on your part that is based on a ridiculous assumption. Tell me why would I or any other trader would think that DG has found the holy grail when he has clearly said up front that 2/3's of his trades are LOSERS! That's the holy grail??

Yes, Gary, that's a very fair point about exits. I do in fact it by feel. I am very strict about entries (given my tight stops) and do not have a system for exits. If something is clear (a high-volume reversal, or deeply oversold, for example), it's easy to cover, but most of the time the market doesn't make it that easy for you. I covered my OIH (at 107.45) just because I am not that bearish on the general market, and the nut-level overbought had worn off. It's why I keep stressing covering at break-even. At least you won't lose this way even if you blow the profit opportunity (there is of course some gap risk, but not typically). Trading is asymmetrical: you can wait forever for a perfect entry point, but once you are in you are forced to make an exit decision even when you don't have the information you'd like. I do not have a good answer for when to get out, but hopefully a solid head-start will make it a happy problem.

Calling direction is the least important aspect of trading, even though every amateur is obsessed with it. If the others don't yet understand, they will learn or go broke, but I have your number.

I'd apologize and eat crow, if you could post size of positions and exits, at the time they occur (within a few hours).

It is you seeking recognition, so shut me up by proving me wrong. And quit calling trading "my craft", it sounds like an infomercial. If you don't even know what % of portfolio in each trade, it's not your craft.

I truly don't care what you do, I'm just asking the questions others should ask of a person that comes here and touts what you do.

Junior miners have had a great performance relative to gold over the last month. I only trade futures, but the junior are looking very nice right now. My thought has been that we will have one more push down in gold to around 1135 or so, much like the February bottom, but the performance of the juniors relative to gold (even during drops) is making me consider that you may be right on your timing here Gary with the final bottom of this drop being in. Care to comment on why this drop would only have 1 leg down in it? Gold typically drops in the ABC form, from what I have observed on the larger declines.

Gary- to narrow down my question for you on my previous post, is there a scenario that you could see where gold could have one more leg down in the next couple of weeks that would still fit in your cycle analysis?

Quite the PC crap. DG, some like your posts, while some think you are full of it. Either accept the fact that some will make fun of you and some will really appreciate your insight or stop posting. I like your calls for one; it adds insight. But the constant hand-holding is getting to be enough. The words "meanie" are just as bad as "LMAO".

In a nut shell some are saying "great stuff", and the other batch is saying "shit or get off the pot". You will need to deal with both.

As I have explained, the % of account is irrelevant because of correlated positions. If you are long 30% SPY's and decide to short 30% IJR's and post "I am shorting 30% of my account in IJR" that doesn't tell you a damn thing. And I am not going to list all my positions and to what degree I think they are correlated! I started posting because i felt like it and I thought it would be helpful to some people. Why are you so incredibly threatened by this? And as for direction being important, I don't even know what to say. Are you actually saying that even a novice trader, if he knew the market was going to skyrocket tomorrow, couldn't buy some SPY and make money? And I will hold you to the "apologize and eat crow" next time I post exit and position size. And why do you post anonymously? Make up a name. I don't even know which malcontent I'm responding to this time.

There wasn't much of a corrective bounce in between the move down, at least not like most of the intermediate declines I can see. The corrective bounce usually breaks the original downward trendline, I dont really see that in the current decline, unless this is the bounce separating 2 legs down.

Well said, Sam. No more. I may post entries, exits, and size from time to time, and occasional comments. But I have to admit it's been interesting, having never done anything like this before, and I like debating. I guess it takes all kinds...And now on to something more useful than jousting with angry young men.

Don't worry DG, I'll call you out with every important question as they arise. I already have, and you skirt them. :)

And what does your overall LT holdings have to do with each and every new trade? Do they not count on their own merits, and if not, why?A hedge is intended to make money when placed, even if at the expense of the LT account.

There is the possiblility that the daily cycle could stretch. Actually it would be the intermediate cycle that stretches. But I tend to go with the "normal" timing band until I see evidence of a stretched cycle.

Everyone-I have read numerous papers on holding physical gold. Of those readers who hold physical gold (and to a lesser extent physical silver) where do you keep it?I am curious for those who care to share! I have read about numerous places and for various reasons?Thank you.

There are basically a couple options. I prefer a safety deposit box or boxes in Canada. The US may still confiscate gold via taxes or by a collapsing dollar. All I need to do is preserve my purchasing power by holding gold, but owe taxes that are not based upon a real gain. I buy in Canada too, so I avoid my personal physical shipment. You can set up a cheap Canadian corporation. Incorporating in Quebec and BC are the best since directors don’t need to be residents. Since you are riding this bull, this is just another force to prevent you from selling. On D-waves you are forced to either short gld, or slv, to negate your trade. But you will of course need to pay taxes on this gain. I guess put options can be used too, but you have time value erosion to deal with. I guess deep in the money puts might help. If you don’t want to bother, you simply ignore the waves and ride the bull. You might find the following helpful too.

TZG. Thanks. It's not that I don't realize that most people blame others for their own failures, it's that I had the sense no one was interested in the posts. But there have been enough positive comments (including Gary) that I will post my best set-ups. I will try to do better describing size and entries, but as I said exits are hard to call. I can at least post my own right after I do them, if I have time. Right now, given my style, we are in no-man's land and I don't see any extremes worth fading on the horizon, but as volatile as this market is, it may just take a few days. We got down to only 5% of SPX stocks above their 50-day lines (right at the lows), which ought to give us an intermediate (1-3 month) bottom, so I am inclined to be bullish, but we'll see.

And you are exactly right: it is incredibly hard for some people to accept that someone else can do something they can't. Looking in the mirror takes guts and self-honesty which most anons don't have, so they just post, lose, and refuse to learn from anyone smarter than they are. Angry, young (usually), wannabe-successful guys.

Why do a$$holes like DG and TZG assume everybody else but them is a loser?

It reeks of desperation and a need to be accepted. If you really wanted, you could shut everybody up with one simple decision, post size with your price. Heck, take a zero off the end of each post for consistency, mr. big-time money man!

" I can at least post my own right after I do them, if I have time"-DG

You have plenty of time, jerkoff. You're here crying all day that nobody wants you.

Now post your shit, our shut your mouth. I'd rather here about your career as a life coach than your huge trading profits. Got a site I can check out. I think I need a life coach for my anger management! LMAO!

Because losers have little emotional discipline, curse, get angry, and hurl insults. I am not a"assuming" a poster is a loser---they are proving it themselves. Read Dr. Brett Steenbarger, a great trading psychologist. he says the same thing (oh wait he didn't post his position size---he must be a phony!) There is simply no reason, other than lack of emotional discipline, to not say what you need to say without resorting to foul language, anger, and insults. That is the hallmark of a loser: lack of emotional discipline and is just what Gary has been writing about all this time. You can't separate your attitude about life from your trading. If you are a hot-headed reactive basket case you will lose in both life and trading.

And I enjoy debating but have to exercise my own discipline and stop responding to you guys, because you cannot be helped until you grow up a little and open up to actually learning something rather than just venting and criticizing. My next post will be a new trade with entry, exit, and size. And now..let the whining begin! (who will be first to Laugh His Ass Off?!)

I don't care about DG's trades one way or the other, so I don't care how he chooses to post them. This is a blog about long-term investing in precious metals, not trading. Your little feud doesn't belong here.

You say you're just here to help others, so why not really help and post size of trades taken and exits when you close? It'd be a big help for everybody.

Only a fool feels the need to be vindicated on somebody else's blog. I don't seek anybody's approval like you seem to need from strangers.

I've pointed out several deficiencies, but you always have an excuse. "Look at my great OIH, but my UUP will work even though it's a loser, and I almost forgot, now that GDX is down, I got out close to the high"

I subscribe to Gary to keep me focused on my longer term portfolio. Watching a jackass stroke himself will be called out every time.

Okay, Anon, you've reeeeealy made your feelings known with regard to DG. Can't say I agree, or even understand what about his posts have you so worked up, but could you just take it as read at this point and move on to something else?

Reading this stuff is the most entertaining event of my boring trading life. Are you kidding me? What else are you going to do as a long-term investor? Honestly, you don't freak out anymore, so you come here to be entertained. I say bring on the trolls! Gold is going up; really what else is there to know. Even a 3 year old can invest in that. Granted a very rich 3 year old.

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